Study ranks Illinois highest in late payments to nonprofits

31 percent of groups in the state said they cut services, programs last year

October 07, 2010|By Duaa Eldeib, Tribune reporter

Nonprofit organizations that serve some of the nation's most vulnerable citizens have been forced to freeze salaries, dip into cash reserves and cut programs because government funding is shrinking and often late in coming, according to a report released Thursday by the Urban Institute.

And human service nonprofits in Illinois have been among the hardest hit.

Nationally, 41 percent of human service nonprofits reported late payments from state, federal and local government sources in 2009, the survey found. In Illinois, that number reached 72 percent, highest in the nation.

Laurel O'Sullivan, vice president of Chicago-based Donors Forum, said a number of human service nonprofits — which provide services in fields including mental health, child care, housing, food assistance and alcohol and substance abuse — are suffering because of the state's financial turmoil.

"The Land of Lincoln has really become the land of late payments," O'Sullivan said. "There's no honor in balancing the state's budget on the backs of human service providers."

The bad economy has proved to be a double whammy, increasing the need for social services while decimating both private donations and governmental budgets, said Elizabeth Boris, co-author of the study by the Urban Institute, a Washington-based policy and research organization.

In Illinois, 31 percent of nonprofit groups included in the survey said they cut services and programs last year.

"If that's what you're doing now, what kind of resilience do you have coming out of the recession?" asked Boris, director of the Urban Institute's Center on Nonprofits and Philanthropy.

Illinois also ranked among the worst in terms of shortfalls in government funding for contracted services, the survey found.

A spokeswoman for Gov. Pat Quinn said he is committed to making good on payments due to nonprofit organizations. But the state is nearly $5 billion behind on its bills.

"We are working with vendors and providers to expedite payments to the best of our financial ability," said Kelly Kraft.

Thresholds, which provides services for people with severe mental illness, received money from the state this week for the first time since July, said CEO Tony Zipple.

"We're not quite caught up, but we're breathing a little easier," he said.

The uncertainty of government funding makes it extremely difficult to plan for the organization's future.

"There's no easy solution, but many providers in Illinois have been pushed into a corner," Zipple said. "They're borrowing money to pay the bills, and the state has not paid them."

"It has to get better," said David Jensen, chief operating officer of Lutheran Social Services of Illinois, which serves nearly 74,000 people. "I certainly wouldn't wish this on anyone else."